Making The Case For Non-Engagement Letters

Why should I waste time and energy protecting myself from something that never happened in the first place?

The answer: to avoid malpractice liability and State Bar grievances.

Claims filed by those whom you never even considered a client are a real and substantial risk. Accordingly, the non-engagement letter should be a principal part of your client intake process.

Without a fee, without a commitment to representation, and sometimes even without having offered any legal advice, an attorney can become the subject of a malpractice suit. This is because the determination of whether or not an attorney-client relationship exists is based on the client/non-client’s reasonable beliefs and perceptions.

Consider the prospective client who mistakenly walks into a firm that exclusively practices environmental law. The potential client describes a clear case of medical malpractice. The attorney replies that as unfortunate as the situation is, the firm cannot help. The client interprets this to mean the claim has no merit. Sometime thereafter, the prospective client discovers that she had a multi-million dollar medmal claim – now moot because the statute of limitations has expired. She sues the environmental firm for legal malpractice.

This scenario occurred in a case in Minnesota. In that lone client meeting, no fee arrangements were discussed, no medical authorizations were requested, and no bill was sent for the consultation. The interviewing attorney made it clear the case was one the firm would not be interested in taking, and the client was encouraged to seek another attorney’s opinion. The client did not consult another attorney. The jury awarded $650,000 in damages.

The whole mess could have been avoided through a simple form non-engagement letter.

Marketing Tool

Beyond its value for loss prevention, a non-engagement letter can serve a valuable marketing function. Think about it. You’re sending a letter to someone who is not a client now but might become one in the future. Hopefully, they left your office with a positive impression. They will likely hold onto that letter – which contains your name and contact information – because it is from a lawyer.

If the case was declined because it was outside your area of practice, consider including a brochure describing the firm’s service. The extra effort could pay off in the future.

Awaiting Further Instructions

The non-engagement letter is not limited to situations where the firm decides not to represent a prospective client, but should also be utilized when it becomes evident that the client has decided not to proceed. If the firm has been awaiting further instructions for a questionable length of time after a consultation, a non-engagement letter should be sent. This documents that the client’s lack of communication or follow-through, not the firm’s inactivity, was the reason the representation did not continue.

The Beauty Contest

Some client stage beauty contests where they check out different firms to see which is the most attractive. If your firm does not win the crown, be sure to send a non-engagement letter. This confirms no representation will be undertaken. This letter should also confirm that information learned during the consultation will not be used to disqualify the firm from representing any other party in the matter.

Multiple Parties

When an attorney is representing less than all of the parties to a transaction, a non-engagement letter should be issued to the unrepresented client, even if this is also stated in the engagement letter. Otherwise, there is a risk that a misunderstanding (or a client fabrication) will lead to claims that the lawyer was providing representation to all. Some courts have even suggested incorporating a recommendation to seek another attorney into the non-engagement letter to help minimize the risk involved.

Similarly, written documentation will provide protection if one or more of the non-clients in the transaction are using another lawyer or are proceeding without one but asks the firm to provide a limited service. For instance, if only the seller is represented in a transaction for the sale of a house and the buyer asks the seller’s attorney to record the deed, the seller’s lawyer should expressly state in writing that he or she will perform the requested service but is not otherwise representing the buyer.

Detrimental Reliance

Claims of negligent misrepresentation can arise out of situations where an attorney, typically counsel for a corporation, offers opinions on a matter and another party to the contract relies on that opinion, even if that party has their own lawyer. No attorney-client relationship is claimed, but liability can still be alleged on the theory of detrimental reliance. Typically, this risk can be avoided by way of a disclaimer stating that such an opinion is intended exclusively for the benefit of the client and no other person or party. A non-engagement letter can be sued as an alternative or supplemental protective measure.

Lawyers Mutual has sample form letters of non-engagement for you to use and/or modify to suit your particular needs. Or you can call our risk management office at 1-800-662-8843 for more information. Visit our website and click on “risk management resources.”

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Ernest (Jay) Reeves Jr. is an attorney licensed in North Carolina and South Carolina. He has practiced in both states and was Legal Editor at Lawyers Weekly and Risk Manager at Lawyers Mutual. He writes the Risk Man column of practice pointers and risk management tips. Contact jay.reeves@ymail.com, phone 919-619-2441.

About the Author

Jay Reeves

Jay Reeves practiced law in North Carolina and South Carolina. Over the course of his 35-year career he was a solo practitioner, corporate lawyer, legal editor, Legal Aid staff attorney and insurance risk manager. Today he helps lawyers and firms put more mojo in their practice through marketing, work-life balance and reclaiming passion for what they do. He is available for consultations, retreats and presentations.